Ukraine central bank to hold interest rate

KIEV (Reuters) - Ukraine’s central bank will keep its key interest rate unchanged next week after four consecutive hikes due to signs of slowing inflation, a monthly Reuters poll of analysts showed on Tuesday.

Ten of 14 analysts forecast the bank will hold the rate at 17 percent at its monetary meeting on April 12.

The other four expect a cut to 16 percent as inflation, according to the poll’s median forecast, will have slowed in March to 13.2 percent year-on-year from 14.0 percent in February and 14.1 percent in January.

Ukraine publishes inflation data next Tuesday.

Inflation has been stubbornly high in Ukraine, driven by high food and oil prices and a rise in workers’ wages and pensions last year and, in an efforts to combat it, the central bank raised the rate by 1 percentage point to 17 percent at its most recent meeting on March 1.

The central bank said after that meeting that monetary conditions were tight enough to bring inflation back to its mid-term target, and has also said it will ease policy as soon as it sees clear signs of weakening inflation risks.

The central bank, which wants to cut inflation to 6 percent in 2019, expects it to slow to 8.9 percent this year from 13.7 percent last.

Analysts generally expect price rises to slow to around 10 percent in 2018.

The central bank has also said Ukraine’s financial stability depends on the country securing more money from the International Monetary Fund under a $17.5 billion program linked to the implementation of prescribed economic reforms.

The chances of that happening look uncertain, as authorities have not yet met commitments to establish an anti-corruption court and bring gas prices up to international market levels.